German start-up Game Domain International (GDI), which has created a virtual world for on-demand game downloads, is reportedly set for a dual listing in Frankfurt and London.

Due in early 2008, the IPO would value the Virgin-backed company at some €1bn (£670m), even though it won’t launch commercially until later this year.

If you’re anything like me you probably think this valuation is crazy. And it is.

The company says it has deals in place to distribute 100 games from 18 publishers via its A World Of My Own (AWOMO) platform, which allows PC users to download games at high speed.

Earlier this month, it inked an agreement to market its service to users of social networking site Bebo.

Simon Burridge, chief executive of Virgin Games, which owns 20% of GDI, told The Independent:

“We believe that AWOMO will do for PC games what iTunes has done for music.”

Roger Walkden, the former European head of Activision, has been appointed chief executive of GDI, the paper added.

All good, but does GDI merit a valuation of  €1bn, given that it has an unproven business model with a weird ’virtual world’ element and, we presume, some as-yet-unknown compression technology as its core asset? Surely not! All of this feels terribly dotbomb, in a market that is becoming increasingly hyped and based on buzzwords. Not that we anticipate any kind of crash, but hey, if it is this easy to justify a €1bn valuation then please point us in the direction of some willing investors.

What is the revenue model exactly? It’s subscription-based, we know that much, so it could be driven by some kind of social networking-based pyramid scheme, with a multiplayer gaming and skill-based betting element luring friends of friends of friends to join in. There are a few of these sites on the verge of launching and while maybe AWOMO isn’t one of them, these other sites are also pushing hard to sign up early adopters. They’re trying to drive buzz, but not giving too much away to convince people to register.

AWOMO is promising ‘discounts and special on going priviledges’ (sic) for beta testers, whatever they might be. We’re reminded of messages on The Motley Fool with ’train leaving station’ as the subject heading.

The company’s website is one big red flag in itself, to be honest. We’ll be watching from the sidelines and making more sense of this when GDI reveals more information.

The future of gaming is certainly internet-based, certainly has a big social element, probably includes leagues and might incorporate a betting element. It will embrace various consoles, rather than compete with them all. 

Our money would be on this sort of thing, rather than the likes of AWOMO.